13.7. Impairment of assets with indefinite useful life
Due to the nature of the business, the majority of single non-current assets of the Group do not generate cash flows which would be independent of flows generated by other assets. Individual cash-generating units are the companies belonging to the particular operating segments.
Individual cash-generating units are the companies belonging to the particular operating segments.
The allocation of goodwill to the particular units generating cash flows is presented in the table below:
| 31.12.2022 | 31.12.2021 | |
|---|---|---|
| Aluminium Systems Segment (Aluprof S.A.) | 17,102 | 17,102 |
| Aluminium Systems Segment (Aluprof S.A.)* | 2,587 | 2,538 |
| Extruded Products Segment | 0 | 61 |
| Flexible Packaging Segment | 350 | 350 |
| Total | 20,039 | 20,051 |
Write-downs of goodwill
| Company name | Operating segment | 31.12.2022 | 31.12.2021 |
|---|---|---|---|
| Alupol LLC | EPS | 61 | 0 |
| Aluprof S.A. | ASS | 650 | 650 |
| Aluprof System Hungary Kft. | ASS | 121 | 121 |
| Romb S.A. | ASS | 185 | 185 |
| Total | 1,017 | 956 |
In the presented periods, the Group carried out annual impairment tests for units to which goodwill and intangible assets with indefinite useful lives were assigned.
Impairment tests carried out in the presented years did not indicate any need to recognise write-downs. The goodwill of Alupol LLC (company based in Ukraine), amounting to PLN 61,000, was covered with a writedown at the moment of the war outbreak in Ukraine, as the site of the company was in the area of military actions.
The below impairment test results reflect the breakdown into companies belonging to the particular operating segments.
Recognised write-downs are presented in the table below.
| Cash-generating units | Aluprof Belgium N.V. (part of the Aluminium Systems Segment) | Aluprof S.A. (part of the Aluminium Systems Segment) | Other companies of the Aluminium Systems Segment* | FPS |
|---|---|---|---|---|
| Basis of recoverable amount | Value in use | Value in use | Value in use | Value in use |
| Goodwill | 2,587 | 17,102 | 48 | 350 |
| Intangible assets with indefinite useful lives (trademarks) | 0 | 22,500 | 0 | 0 |
| Valuation amount | Exceeding the tested values** | Exceeding the tested values** | Exceeding the tested values** | Exceeding the tested values** |
| Impairment | Not determined | Not determined | Not determined | Not determined |
| Source of data | Proprietary projections | Proprietary projections | Proprietary projections | Proprietary projections |
| Valuation basis | 5-year cash flows projection | 5-year cash flows projection | 5-year cash flows projection | 5-year cash flows projection |
| Incremental growth rate | 0% | 0% | 0% | 0% |
| Discount rate applied1) | 9.75% | 11.90% | 16.45% | 11.58% |
| Susceptibility analysis:: | ||||
| Interest rate +5% | No impact on test result | No impact on test result | No impact on test result | No impact on test result |
| Cash-flows -5% | No impact on test result | No impact on test result | No impact on test result | No impact on test result |
* No justified or probable changes in the key assumptions made by the management with regard to the recoverable amount of the units make the carrying amount of the units exceed their recoverable amount.
Cash flows projections were based on 2023 budget assumptions, as well as the strategic assumptions of the Group until the year 2025.
The recoverable amount corresponds to the value in use of the assets estimated on the basis of the cash flow projections included in the 2023 Budget and 2025 Strategy adopted by the Management and Supervisory Boards, and the value estimated for 2026 and 2027 on the basis of forecasts for 2025. Within 5-year detailed projections replacement expenditure was assumed at half the annual depreciation charges, and for the residual period, in the amount of depreciation of the last year of the detailed projection.